Howard Dean's recent midnight confidence that he would like to re-regulate vast portions of the American economy even as he sweepingly repudiates his prior support for its free trade agreements should be juxaposed with what is, and probably will remain for some time, a major feature of the federal government: it's large deficits - or at least its large debt.

One now-standard explanation for Republican/Conservative acceptance of the large federal deficits that lead to large federal debt is the "starve the beast" theory. A reasonable explanation is provided by Holman Jenkins, for example:

What Republicans have understood ... is that the only effective long-term form of fiscal discipline is tax cuts.

Republicans have become the Party of Tax Cuts: that is, the party that lets you keep your own money, the party that protects the private sector from being smothered by big government. In a more sophisticated audience's eyes, it means a second thing: the party that restrains the growth of government by keeping it on the only fiscal leash that works--a k a the deficit, which maintains a constant tension between forgoing new spending or borrowing to pay for it.

Admittedly, this involves Republicans in a certain amount of self-duplicity (We don't mean this in a bad way; every party has to keep its big tent together.) Not only do Republicans take as given that Congress will spend every dime it can tax and then every dime it can borrow, until it runs up against its effective credit limit. Republicans also accept that they will behave exactly like Democrats in this matter.

The deficit has become the Repubocrat/Demolican equivalent of using adhesive tape as a diet aid. It's not subtle. It doesn't demonstrate a high degree of willpower or self-control. But it works, sort of.

But even if this theory is correct, the deficit restrains only federal spending and the public's loathing of taxes only restrains tax revenues. So suppose the theory is correct, and big deficits leading to big debt combined with tax-animus effectively restrain both federal spending and federal tax revenues. Whay happens then?

Well, the appetite of the "beast" - the desire of various constituencies to shift wealth their way through the federal government - doesn't abate. If it can't be slaked through direct federal taxes and spending, then it will seek satisfaction through indirect federal tax and spending equivalents. Nothing in the existence of a large deficit, large debt or tax animus directly stops the federal government from shifting real wealth through regulation. Put another way: if the federal government can't tax you and spend your tax money on its favored constituencies, then it might instead be able to instruct you to spend your own money on its favored constituencies through regulation. Indeed, to the extent any strategy (including "starve-the-beast") effectively blocks the direct tax-and-spend route of wealth shifting, one would expect pressure to exploit the indirect shift-wealth-through-regulation approach to build.

And that's just what Dr. Dean is proposing to do. With his re-regulation program he is suggesting another means to feed the beast.

But increased regulation is not the only way the federal government - or any sovereign - can disguise a tax-and-spend wealth shifting ploy.

There is also inflation. Inflation has not been an issue much in the United States recently - to some extent because some time ago the Fed demonstrated its willingness to squeeze the economy into a recession rather than allow much inflation. [The trade deficit and increased productivity have a lot to do with that, too, for example.] Some canny analysts suggest that the Fed's current easy money, low interest rate policies have created a monetary bubble waiting to explode into serious inflation. If that were to happen, the Fed would again be called upon to take recessionary actions.

But would the same President Dean who proposes to re-regulate the economy as an indirect tax-and-spend ploy be likely to appoint Fed board members willing to take recessionary action to snuff out yet another indirect tax-and-spend ploy? Would a Democratic Party now chanting that President Bush should be cast out for failing to maintain employment at the level of the last bubble be willing to accept recessionary actions necessary to constrain the next bubble? Dr. Dean represents an attempt to return to an older model of regulatory state - but last time that model crashed in an inflationary cloud, which is largely what occassioned Ronald Reagan's ascent.

And let's not forget a third indirect tax-and-spend ploy: tort judgments. Given Dr, Dean's recent musings on re-regulation, it would not be surprising if he is also contemplating some major expansions in federal tort liability law.

[An aside: Herr Doktorprofessor Paul Von Krugman often complains about tax cuts, and argues that they will lead to Argentina-like inflationary results in this country. But Argentina actually had very high tax rates. Illegal tax evasion was a prominant result of a confiscatory tax system. So the Argentine government, unable to raise money through direct taxes, imposed the indirect tax of inflation. For some reason Herr Doktorprofessor doesn't mention that much in his anti-tax-cut rants.]